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Solutions
Problem 1-3
Out of 105 countries in the sample, openness between 1991 and 2001 increases in 79 of them.
The rest, 26, experience a decrease. Column AG in the spreadsheet has a "1" for countries where
openness increased between these years, and a 0 for the countries where it decreased.
Problem 1-4
The 20 largest and 20 smallest countries in terms of population (in 2001) are shown in column
AJ. Their openness is shown in column AL. Average openness (in 2001) for the 20 largest
countries is 54.4%, and for the 20 smallest, 118.2%.
Problem 1-5
The 20 richest and 20 poorest countries in terms of GDP per capita (in 2001) are shown in
column AP. Their openness is shown in column AR. Average openness (in 2001) for the 20
richest countries is 1.003, and for the 20 poorest, 0.603.
Problem 1-6
Based on the results found above, smaller and richer countries tend to be more open. Smaller
countries tend to produce a more narrow range of products and thus meet more of their
consumption needs through imports. The relationship between wealth and openness is harder to
disentangle. It could potentially mean that trade promotes growth and open countries become
rich a possibility explored in Chapter 9. It could also mean that wealthier countries have better
policies in general, and that having low barriers on trade is an example of that, or that consumers
in wealthier countries consume a broader range of consumption goods other things being equal
and so tend to import a larger fraction of their consumption.
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